A major PAN card misuse scam is unfolding across India, as reported by the Times of India on June 18. Cases of PAN card misuse have been reported from various places, highlighting the vulnerability of the system.

Individuals across the country, particularly senior citizens and other vulnerable groups are facing severe repercussions due to the misuse of their PAN cards.

The Unfolding Scam

According to the report by Lubna Kably, a senior citizen and homemaker from Mumbai had to escalate her case to the Income-tax Appellate Tribunal (ITAT) due to alleged misuse of her PAN.

A tax officer claimed she had sold a property worth Rs 1.3 crore in 2010-11, treating it as her income. The woman, being illiterate and a cancer patient, could not respond to the I-T notices. 

At a recent ITAT hearing, her counsel argued that her PAN had been misused in the property registration. The tribunal observed that the tax officer had not conducted an independent investigation, such as obtaining details from the property registrar and the buyer.

Consequently, it ordered the I-T department to gather complete information from the registrar and ensure the woman received a fair hearing.

This incident is not unique. Across India, there have been multiple reports of PAN misuse. For instance, Usha Soni from Betul, Madhya Pradesh, received an I-T notice for Rs 7.5 crore a decade after her death.

Similarly, Nand Lal, a small shopkeeper in Rajasthan, filed a police complaint after receiving an I-T notice for Rs 12.2 crore. Fraudsters often target vulnerable groups such as the deceased, senior citizens, farmers, and students.

A case from Gwalior involves a college student who discovered that a company had been registered using his PAN card, operating in Mumbai and Delhi. “I am a college student in Gwalior. After the notice from Income Tax and GST, I came to know that a company has registered through my PAN card which is being operated in Mumbai and Delhi. I do not know how my PAN card has been misused and how the transactions have been done.” 

Additionally, Superintendent of Police (ASP) Shiyaz K M told ANI, “An application has been received from a youth that transactions amount of more than ₹ 46 crore has been made from his bank account. The documents in this regard are being checked. The PAN card has been misused, a company has been registered through it and transactions of such a huge amount have been done.

Recognizing and Reporting PAN Card Misuse

The ToI report quoted Ketan Vajani, a chartered accountant, as saying, “Misuse of the PAN by unscrupulous elements can cause lots of difficulties, including huge demands being raised on an individual due to additions to his/her income during assessment for transactions that do not pertain to the PAN holder. While the highest secrecy must be maintained of one’s PAN, the reality is that details are freely shared for various purposes.”

The Central Board of Direct Taxes (CBDT) responded by advising individuals to refrain from sharing their PAN information/PAN card where it is not mandated by government guidelines or in the public domain. “The PAN database at present is more than 70 crores. Linking with Aadhaar was brought in largely to prevent/stop misuse of PAN. However, if there are cases of suspected misuse of PAN, it is advised that a complaint may be filed with the police.” 

Ameet Patel, tax partner at Manohar Chowdhry & Associates, highlighted a serious issue: “The issue of the I-T department relying completely on information filed by various agencies and initiating action against the taxpayers is a serious issue and needs a lot of rethinking by the department. It has now come to a stage that every taxpayer has to necessarily check his/her annual information statement (AIS) every few weeks.”

The Annual Information Statement (AIS) provides comprehensive data from reporting entities like banks and property registrars. This includes details on bank interest, dividends, and transactions related to the purchase and sale of securities or immovable properties. 

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According to Patel, as soon as a wrong entry is found in the AIS, feedback in the AIS system is initiated immediately and the error is flagged. If the mistake has not been rectified, the need to file an FIR with the police arises, he further added.

Vajani added that a police complaint could also act as a shield if, during an assessment, additions are made for transactions that do not belong to the PAN holder. “It would be a taxpayer-friendly move for the I-T department to provide a tab on its website to report any misuse.

The CBDT explained that when a reporting entity confirms a transaction, the I-T department cannot take action unless the PAN holder reports the issue to the police and the case is investigated. 

Additionally, a PAN is not deactivated upon the holder’s death to allow the I-T department to initiate or complete any pending proceedings. Family members or legal heirs must inform the jurisdictional assessing officer of the death, and provide copies of the PAN card and death certificate. The officer will then mark the death against the PAN.

How To Know If Your PAN Is Being Misused

To detect if your PAN card is being misused regular monitoring of your credit score and financial statements is essential. Here’s a step-by-step process to check for PAN misuse:

  1. Visit a credit bureau website and check your credit score.
  2. Enter your personal and financial information.
  3. Verify the OTP sent to your phone.
  4. Review your credit score and report for any suspicious activity or loans.

Contacting your bank if you notice suspicious transactions is also advisable. They can help you investigate and take the necessary steps to protect your account and PAN.

According to Patel, the system has scope for an obvious improvement: Whenever a death certificate is issued, an automatic intimation should go to the I-T department, following which that particular PAN number can be marked as having belonged to a deceased person, which would make it easy to stop any big future transactions against that number.

To avoid PAN card fraud, it is advisable for all PAN card holders to thoroughly check their annual information statement (AIS), which provides comprehensive data from reporting entities such as banks and property registrars. The AIS data includes bank interest, dividends, and transactions related to the purchase and sale of movable or immovable assets.

A PAN card holder can generate credit scores to check whether their PAN has been misused. Through CIBIL, Equifax, Experian, or CRIF High Mark, you can check if any loan has been taken under your name. Financial reports should be checked through fintech platforms such as Paytm or Bank Bazaar.

The PAN card misuse scam highlights significant vulnerabilities in India’s tax and identification system, affecting a wide range of individuals, particularly the most vulnerable. It underscores the need for enhanced vigilance and proactive measures by both the authorities and PAN card holders. 

Regular checks of the AIS, monitoring credit scores, and careful handling of PAN card information are crucial steps in preventing misuse. The government and tax authorities must also refine their processes to ensure prompt detection and resolution of fraudulent activities to protect citizens from undue financial and legal hardships.

Image sources: Google Images

Feature Image designed by Saudamini Seth

Sources: Times Now, Hindustan Times, Times of India

Find the blogger: Katyayani Joshi

This post is tagged under: PAN Card Misuse, Tax Fraud, Financial Security, PAN Card Scam, Identity Theft, ITAT, Aadhaar Linking, Protect Your PAN, Financial Fraud, Taxpayer Rights, Fraud Prevention, Cyber Crime, Financial Awareness, Credit Score Check, PAN Card Safety, Senior Citizens Safety, Digital Security, Tax System Reform, AIS Monitoring, Protect Your Identity

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